Tag: government

We’re all Luddites now – Wage deflation and falling living standards

As the consumerist society runs out of credit, we have to find new ways to drive our economy

A post on today’s Macrobusiness describes how Australia’s General Motors workers being asked to take a pay cut is the harbinger for a general fall in the nation’s wages.

This is coupled with a post by Paul Krugman in the New York Times sympathising with the Luddites as technology takes away many middle class jobs that were not so long ago thought to be the safe knowledge jobs of the future.

Krugman points out that in the United States income inequality started accelerating in the year 2000, the stagnation of most Americans’ incomes started a decade or two before that.

For the last few decades, expanding credit allowed the consumerist society to continue growing, but the crisis of 2008 marked the end of that that economic model. Although governments around the world have tried to keep it alive by pumping money into their economy.

Now we have to face the reality that the Western world’s standard of living is falling for the first time in a century.

For some this is going to be really tough – although one suspects those who will really complain are those least affected.

What is clear is that many of our business and political leaders aren’t prepared to face this change. Dealing with that is going to be the biggest challenge of this decade.

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The Present is Unevenly Distributed

The global economy is changing faster than many business and political leaders realise. The future is here now.

“The future is already here – it’s just not evenly distributed” said author William Gibson in a quote often used by futurists and speakers.

A great example of this is the Australian Government’s National Digital Economy Strategy which was re-released last week.

The report itself was met with howls of indifference as the objectives were modest with little new really added since its first release in 2011. What’s notable though almost all the stated objectives for 2020 are achievable today. Here’s the list.

  • Government service delivery—by 2020, four out of five Australians will choose to engage with the Australian Government online.
  • Households—by 2020, Australia will rank as one of the top five OECD countries in terms of the proportion of households that connect to broadband.
  • Businesses and not-for-profit organisations—by 2020, Australia will rank as one of the top five OECD countries in the proportion of businesses and not-for-profit organisations using online opportunities to drive productivity improvements and expand their customer base.
  • Health and aged care—By 2015, 495,000 patients in rural, remote and outer metropolitan areas will have had virtual access to specialists and by 2020, 25 per cent of all specialists will be participating in delivering telehealth consultations to remote patients. By 2020, 90 per cent of high priority consumers such as older Australians, mothers with babies and those with a chronic disease, or their carers will be able to access individual electronic health records.
  • Education—by 2020, Australian schools, registered training organisations (RTOs), universities and higher education institutions will have the connectivity to develop and collaborate on innovative and flexible educational services and resources to extend online learning to the home and workplace and the facilities to offer students and learners the opportunity for online virtual learning.
  • Teleworking—by 2020, Australia will have doubled its level of telework to at least 12 per cent of Australian employees.
  • Environment and infrastructure—by 2020, the majority of Australian households, businesses and other organisations will have access to smart technology to better manage their energy use.
  • Regional Australia—by 2020, the gap in online participation and access between households and businesses in capital cities and those in regional areas will have narrowed significantly.

With the exception of the telehealth objective, where the barriers don’t lie in the technology, all of these laudable aims could have been achieved in the past 15 years.

Some of them already have but it’s been missed by the cossetted bureaucrats who write these reports.

For the businesses who aren’t already “using online opportunities to drive productivity improvements and expand their customer base”, these folk are digital roadkill anyway and may as well get jobs driving taxis today.

Probably the most depressing of the objectives is the first one focusing on government service delivery. Here’s Bill Gates’ comment about online government services while visiting Australia.

The Government itself needs to become a model user of information technology, literally seeing government will work with its citizens, with its businesses without paper exchange will be able to do in our taxes, licences, registrations, all these things, on a basis where you don’t have to know the organisation of government and its various departments, you don’t have to stand in line, you don’t have to work with paperwork.

Gates’ comments were made in September 2000.

That a vision for the future is so modest, mundane and achievable today is probably the most disappointing thing of all with reports like the Australian National Digital Economy strategy.

Not only is the future unevenly distributed but so too are the jobs and prosperity that will flow from it, if you’re going to have a vision. You better have a good one.

Image courtesy of pdekker3 on sxc.hu

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Are local governments the key to hyperlocal media success?

Does New York City’s partnership with Nextdoor.com create an opportunity for hyperlocal media?

Wired Magazine reports New York City residents are to get their own social network as the local government teams up with Nextdoor.com to provide a neighbourhood information service.

The aim of the partnership between Nextdoor.com and New York City is to improve the delivery of local services to residents.

The partnership means Nextdoor, which connects residents into geographic social networks based on their verified addresses, will be fully integrated with New York government departments, to be used by police, fire, utility, and other agencies. Nextdoor CEO Nirav Tolia anticipates the city will use the service to post information about power outages, construction notices, traffic accidents, and weather events like tropical storms, among many other potential use cases, bolstering municipal efficiency and citizen engagement.

On the face of it, this seems a great way for local government to communicate with residents, but it may be this arrangement turns out be a way to make hyperlocal media work.

A continued disappointment are the failures of  creating local neighbourhood news  services — known as hyperlocal media — with NBC recently closing down its Everyblock operation and AOL struggles with its Patch service.

Part of the problem is that hyperlocal news is labour intensive, doesn’t scale very well and without the locals becoming part of the online community, these services struggle to get traction.

Another aspect is the advertising model, local newspapers were insanely profitable when they were the main way for neighbourhood businesses and real estates agencies to advertise.

The web broke that model and Google’s failure to execute with its local business service has meant there isn’t an online replacement for the local advertising model.

So it may be that partnerships between local government and the online platforms are the way to make hyperlocal services work.

It will be interesting to see if the New York City partnership does become a model for hyperlocal news or just becomes a glorified and expensive community noticeboard.

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Australia’s economic rigor mortis

Australia has become too complacent in a competitive world warns one US business leader.

This is worth watching, Dow Chemical CEO Andrew Liveris and Australian Business Council chief Tony Shepherd spoke on Sunday with Alan Kohler on the ABC’s Inside Business.

At 5.40 Andrew Liveris says Australia is suffering a state of economic rigor mortis – “we’ve lost the ability to innovate” – with no plans and a great complacency. It’s something all Aussies should reflect upon, although don’t expect these blokes to be any help.

 

 

 

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Smart cities and the sensors in your pocket

Community wide sensors promise to change government

National Public Radio’s Parallels program has story on how the Spanish city of Santander is wiring itself as a ‘smart city’ with a network of sensors wiring everything from garbage bins to parking spots.

The hope with the sensors is they’ll will improve local government’s services, allowing things like more efficient garbage collection and better pricing of parking meters.

What’s notable about the story is that smartphones are included as ‘sensors’ with Santander residents being able to submit data from their handsets.

The idea of smartphones as sensors isn’t new — pothole reporting apps were early to the iPhone — the increased sophistication of handsets and improved tracking technology is making them more powerful.

So we have another Big Data problem with local councils being flooded with information.

Processing all this information is going to require the community pitching in so the data is going to have to open.

Once governments make the data open it also creates opportunities for smart entrepreneurs to create new services and technologies.

Creating new opportunities is a hope of government sensor programs around the world, including Tasmania’s Sense-T project .

With factors like water quality and weather being monitored, existing sectors become more efficient and new industries are being created.

Hopefully the urge to hoard this rich, community data will be resisted by governments.

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Ending the motor industry’s 1950s delusions

Can governments kick their habit of supporting the motor industry and focus on 21st Century industry investments?

Today Ford announced the pending closure of its Australian manufacturing operations, bringing to an end ninety years of the company building automobiles down under.

Ford’s announcement is small on a global scale – the Broadmeadows factory built 40,000 cars out of a worldwide supply of sixty-three million – it does illustrate some major structural issues facing both the global automobile industry and the Australian economy.

An Automotive Depression

Over capacity has been the curse of the automobile industry for decades as governments have propped out producers around the world.

KPMG’s 2012 Global Automotive Survey forecast the global industry would be 20 to 30 percent over capacity in 2016.

This doesn’t seem to worry industry executives or their government supporters, as KPMG reported;

Alarmingly, most auto executives still seem to regard the risk of overcapacity and excess production as a necessary evil to remain competitive. As the rapid growth of recent years eventually slows down, manufacturers that fail to address overcapacity could face some tough decisions.

Ford’s Australian executives could at least be credited with facing some of those tough decisions.

Many governments though are still in denial as they continue to subsidise motor manufacturers in an effort to copy the industry model that worked for the US Midwest during the 1950s.

Indeed, the Australian government in 2008 committed 5.2 billion dollars to support their domestic industry through to the end of this decade. Ford’s announcement today coupled with General Motor’s cutbacks last year show that policy is in ruins.

At the Ford and government press conferences, journalists pressed the Prime Minister and the Ford Australia’s CEO about repaying some of the millions of corporate welfare doled out to the multinational over the last decade. Naturally little was to be said about that.

In a stark comparison to Ford Australia’s announcement, US electric car manufacturer Tesla Motors repaid a $465 million US government loan.

While no-one can say Tesla’s future is certain, at least US investors are putting their money on 21st Century technologies instead of propping up declining industries of the last century.

Australia’s predicament

The car industry is just one sector that faces global overcapacity – ship building, real estate and mining are just three with similar excess production.

For Australia, the mining industry is winding down investment as worldwide production capacity expands. At the same time, the blue sky projections of China’s resources demand are being challenged.

While the mining boom comes to an end, Australia now has to face the consequences of the nation’s economic decision to focus on resources and property speculation in the 1990s and early 2000s.

As the Thais and Indonesians found in 1997, and the Irish and Icelanders a decade later, economies based on unsustainable foundations seem to work fine until suddenly they don’t.

It may well be that Australia is about find out what happens when the economic tide suddenly changes.

One bright side is that the government has the best part of five billion dollars to invest in new industry – assuming Australia’s politicians can wean themselves off their 1950s view of the world economy.

Image of Ford Australia celebrating 50 years of Falcon Production courtesy of Ogilvy Communications.

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Training for mediocrity

Australian treasurer Wayne Swan’s cap on education expenses is a path to mediocrity

In researching the tech angle of the 2013 Australian Federal budget for Technology Spectator last night one thing kept really bugging me – the government’s cap on tax deductible education expenses.

The decision to cap self education deductions was made earlier in the year by Treasurer Wayne Swan.

The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.

So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.

We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government eight billion dollars last year.

So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.

This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.

What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers.

Many of those workers will be able to get their courses and education expenses under the limit, many others won’t.

As the New Australian points out, Wayne Swan – like most lifetime Australian political apparatchiks – has never to worry about reskilling as the party has nurtured and cared for him all his adult life.

In the real world though, Australia’s economic future will depend on the workforce picking up the skills to operate in rapidly changing times.

That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.

Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.

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